Reasons Why You Shouldn't Have a Credit Card

Nowadays, you can easily use a credit card to purchase at your local stores and even online. It does seem convenient at times since you don't have to bring wads of cash if you're purchasing something a bit expensive. All you have to do is bring your card, charge it then pay for it later. But then, here are some reasons why you shouldn't have a credit card. Let me share some of my experiences and observations.

Identity theft is quite common especially when it comes to online purchases. You can never be 100% sure that you are transacting safely on the internet. After you send your credit card information, there is a chance that it might get stolen by malicious websites then after that, they can now use your card. We've been a victim of this before. If I remember correctly, it was in 2001 when we purchased something online and after 2 months or so, a fraudulent transaction occurred and someone used the card information to purchase appliances.

In most stores, well practically almost all of the major stores I've been to especially appliance and electronic shops, they offer more discounts and privileges if you pay in cash. They would usually have to add a percentage to the price if you're paying by installment through a credit card so you're actually paying more.

Interest rates can make your finances suffer. If you're just a common consumer, you'll most likely feel the effects of finance charges and interest rates in the long run. You'll notice that instead of saving money, you could have used that interest money for food. If you plan to pay the card at the minimum balance, think again. It will result in bigger finance charges since you have a bigger balance and you're practically handing money over to the banks.

Here's an example, if you have a credit limit of $10,000. Let's say you used all of it and you have a minimum payment of $100. Next month, since you did not pay in full, it will generate finance charges. After a few years, just imagine how much money you've wasted on finance charges. Let's say your finance charges are $50 a month. After 4 years of paying minimum, you actually gave up $50 times 48 months. That's $2,400. You could have used that money for yourself instead of the banks and believe me, some of them are really greedy. Based from this situation, they actually get money from those who are less capable. So, if you are one, ditch the idea of a credit card you'll most likely dig your own debt pit. But if you can pay in full every month, then no problem.

If you don't have a credit card, you don't have to worry yourselves about paying monthly, checking how much your minimum due is, etc. Just get a checking, ATM or savings bank account instead then withdraw if needed.

Remember that when you use a credit card, you are borrowing money. To say that "you have buying power", which me and my sister told before, is somewhat ironic. Yeah you can acquire the item but you're technically not purchasing it with your money. Theoretically, you have the item but it's not yours yet until you pay for it. You can use it but you probably are worrying about paying for it.

And most importantly, do not get a credit card unless you don't know at least the basics on how it works. You should study first what credit limit is, what your cut off date is, your maximum credit, the features of your card, the interest rate, billing cycle, minimum payments, finance charges, cash advances, straight charge and installment plans and so on. You should know everything you can before acquiring one.

And never ever go beyond your means or capability to pay. If you know you'll have a hard time paying at least the minimum from your credit card then don't get one. If you want to get a card to try and figure that out how credit cards work may lead you to commit more mistakes.

It all comes down to your choice, your preference and your needs. If you want to get a card then by all means go ahead. But just make sure you understand how the system works and you'll be fine. Everyone is susceptible to impulse buying especially if you have credit to spare. Take control of your credit card do not let it, and the bank, control you.